Five Financial To-Do’s Ahead of Welcoming a New Baby to the Family

My wife and I are slowly turning the corner from having two babies to two full blown toddlers. Like most parents, the question “where did the time go?” seems ever so true. It was not easy, and we still have a lot more fun chaos ahead, but we are glad we took the following steps to prepare financially before we had our first child.
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At times it is hard to think of control when having kids, but let’s review some of the things you can control.

1. Guestimate baby delivery expenses

This is complicated as it depends on multiple variables, such as is if the baby is going to be delivered at home or at a hospital, the health of baby and mom, and your health insurance plan. The cost can really swing from a couple thousand to more than $30,000.

If possible, try and go to the doctor’s office or the billing office at the hospital prior to delivery to get an idea of the cost. Personally, having a ballpark was helpful and I appreciated the various scenarios that the financial coordinator at my wife’s OBGYN walked us through in those early pregnancy days.

2. Determine how you will pay

If you or your spouse are eligible for a Health Savings Account (HSA), Flexible Savings Account (FSA), or other medical expense plan I would look to find out what the maximum limit is per your plan and fully fund it. The benefit of saving dollars pre-tax and then being able to pay for medical expenses with tax-free dollars is an amazing benefit. There are different caveats to the various accounts so understand if dollars need to be spent before a certain date, what qualifies for medical expenses, and if you can invest extra funds in the account.

My colleague Cristy Freeman recently wrote about HSAs here:

3. Review your insurance policy

If you have life and/or umbrella insurance policies, make sure to review them ahead of time. And if you don’t have one or the other, research your options as they are both easy to get and affordable. People oftentimes forget about umbrella, but it is important. Your basic auto and home policies are good, but it is nice to have a little extra when the baby arrives as you will likely have more visitors, babysitters/nannies and playdates. Life insurance is something people do not want to think about but when both of you are healthy it will keep premiums low and down the road if there is not a need for the coverage it is easy to cancel.

Learn how to determine if you need life insurance here:

4. Do not overspend on “stuff”

My wife and I were one of the last of our friends to have children and one bit of advice I found helpful was do not buy a lot of stuff. That was not an easy task because we can see how it is easy to go into a store and say we need this or that. We tried to keep it simple and got the car seat, crib and diapers. Before going out and buying certain items, I suggest trying hand-me-downs from family or friends. Let’s just say that not all bottles are created equal!

5. Get your estate documents in order

This might sound morbid considering you are about to bring life into this world, but for that very reason it’s extremely important to ensure your documents are current and after the birth that the child is included in your estate plans as you desire. Work with your estate planning attorney to determine what all should be reviewed and updated.

Our Director of Trust Services Roger A. James goes into more detail on why you need an estate plan here:

These are just a few things to think about before having a child, but I strongly suggest knocking out this to-do list now before the lack of sleep sets in.

chad foster headshot 250 by 300Chad E. Foster, CFP®, CDFATM, ChFEBCSM
Financial Advisor


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